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EU sanctions target Russian class society and outline oil price cap

European Union’s eighth package of measures against Russia envisages ‘solutions’ to deal with any flagging out and other practices intended to evade the new oil price cap

‘The package agreed today introduces into the EU legislation the basis to put in place a price cap related to the maritime transport of Russian oil for third countries and further restrictions on the maritime transport of crude oil and petroleum products to third countries’ — European Council

RUSSIA’s Maritime Register of Shipping will be banned outright under the latest round of sanctions approved by the European Union.

Measures in the EU’s eighth sanctions package also include the framework to apply a price cap on Russian oil and extend the list of restricted items and services already targeted as part of efforts to squeeze the Russian economy and the Kremlin’s ability to wage war.

“The package agreed today introduces into the EU legislation the basis to put in place a price cap related to the maritime transport of Russian oil for third countries and further restrictions on the maritime transport of crude oil and petroleum products to third countries,” the European Council said in a statement.

Action against Russia’s classification society will cause little surprise as it was among the earliest state entities subjected to financial limitations under a previous round of EU sanctions in March. It was then expelled as a member of the International Association of Classification Societies.

As well as the withdrawal of recognition by Brussels, the new regulation will require member states to cancel their authorisations for the society within 90 days. In the meantime, the registry will be prohibited from conducting inspections and surveys or issuing certificates.

Any statutory certificates already issued by it will be invalidated within six months, a period reduced to three months in the case of International Ship Security certificates.

Vessels certified by the society will be banned from EU ports and locks.

The final text of the European Council decision also enshrines the prohibition against transporting, “including through ship-to-ship transfers”, Russian crude oil to third countries from December 5, and an equivalent ban on transporting products as of February 5.

“It will be prohibited to provide maritime transport and to provide technical assistance, brokering services or financing or financial assistance, related to the maritime transport to third countries of crude oil (as of December 2022) or petroleum products (as of February 2023) which originate in or are exported from Russia,” it said.

As expected, the package grants an exemption for shipments purchased at a price not exceeding a ceiling that is to be laid down by a “price cap coalition” formed by the Group of Seven leading economies and the EU.

The framework provides for the European Commission to closely monitor the effectiveness of the cap and potential impact on member states, including maritime nations such as Greece, Cyprus and Malta that have expressed unease about tanker owners flagging out to be able to continue carrying Russian oil unrestricted to third countries.

However, the regulation also seeks to prohibit firms from providing future technical assistance, brokering, financing or insurance for any non-EU vessels transporting Russian oil in breach of the price cap.

The EU intends to keep a close watch on “potential circumvention practices of the price cap, such as deflagging of vessels,” according to the package. It also said the EC will “propose appropriate solutions” to such practices if warranted, without going into any further detail.

Russia has said it will not sell oil to any country participating in the price cap.

The new sanctions also extend a ban on imports from Russia of steel and steel products, and prohibits imports of wood pulp and paper, as well as certain types of machinery, appliances and chemicals, precious metals and stones used in jewellery, plastics and cigarettes.

They also prohibit export of EU goods used in aviation, extend a ban on the export of electrical components, including certain semiconductors, and ban items that can be used by the Russian military and police.

Architectural and engineering services, IT consultancy and commercial legal advice to the Russian state or Russian entities are also being prohibited in the EU.

The latest round of sanctions responds to the fact that Russia has “further escalated its aggression against Ukraine” through its move to annex swathes of Ukrainian territory, its recent mobilisation of reservists and threatening the use of nuclear weapons, the EU said.

The agreement is expected to be formalised on October 6 if no EU country raises an objection when European leaders gather in Prague for the first meeting of the so-called European Political Community, an extended forum of 44 countries.

The fledgling EPC includes the 27 EU member states, with six western Balkan countries, the so-called Associated Trio of Georgia, Moldova and Ukraine, plus Armenia and Azerbaijan, the four EFTA countries as well as the UK and Türkiye.

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